Pennsylvania Senate Passes State’s First iGaming Bill; Massachusetts Senator Slows Momentum

When legislative sessions commenced across the country to begin the year, Pennsylvania and Massachusetts were considered likely candidates to legalize and regulate online gambling.

But after a whirlwind week of legislative action in both states, only Pennsylvania appears to be pushing forward on the iGaming front, with Massachusetts punting on the issue until next year.

On May 23, the Pennsylvania Senate Community, Economic & Recreational Development Committee passed H-271 via an 11-3 vote. That same day, the Senate Appropriations Committee also moved the bill – which calls for the regulation of online slots, casino games, poker, and daily fantasy sports (DFS) – forward by a 24-2 margin.

One day later, the full Senate voted 38-12 in favor of passing Pennsylvania’s first online gambling bill.

Senate Minority Leader Jay Costa (D-Allegheny) – who sponsored his own iGaming legislation this year and has been a vocal supporter of the issue – spoke from the Senate floor on the importance of retaining iGaming enthusiasts and the revenue streams they create:

“To not have those folks, we lose business along those lines, but more importantly, we lose an opportunity, an opportunity to have people who would be playing in that space.”

The Senate estimates that online gambling license fees and yearly taxation will generate between $110 million and $147 million next year, badly needed funds that have already been earmarked by Governor Tom Wolf to help resolve the state’s budget deficit.

Those projections are largely based on licensing fees, which H-271 sets at $5 million apiece for online poker and casino platforms – and $10 million for operators choosing to offer both. With up to 12 iGaming licenses slated to be issued, one for each of the state’s current land-based gambling licensees, garnering an eight-figure sum should be an attainable goal.

However, by passing H-271 and not one of three other iGaming bills introduced this year, Pennsylvania opted for the highest proposed tax rate of 54 percent on slot/casino revenue (poker will be taxed at 16 percent). And as Steve Ruddock of Online Poker Report has pointed out, that enormous tax burden may be enough to force smaller sites to sit on the sidelines, as the current 17.5 percent tax on iGaming revenue in New Jersey allows operators to retain just 5 cents on every dollar earned.

The House of Representatives will review H-271 in June and add its own amendments, before voting to send the iGaming issue to Governor Wolf’s desk.

Unfortunately, players in Massachusetts will be forced to wait another year for iGaming to launch, after Senate President Stan Rosenberg (D-Amherst) halted all momentum on the issue:

In a recent interview with Boston Herald Radio, Rosenberg outlined the Senate’s strategic approach to handling the current push to regulate both online lottery sales alongside slots, casino games, and poker:

“Online lottery and online gaming are both issues that are being reviewed now to try to figure out how we manage the situation so we don’t hurt the Lottery.

And in the case of online gaming that we don’t hurt the casino industry we’re building in Massachusetts.
We could potentially act next year… potentially.”

The Massachusetts Senate passed an online lottery measure last year, but it eventually stalled within the House amidst concerns that internet sales would inordinately effect the state’s traditional lottery system.

The state did manage to sign a DFS bill into law last year, which triggered the creation of the Massachusetts Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports. The panel was tasked with studying the latest online lottery and iGaming bills introduced to begin 2017, and their recommendations are scheduled to be published on July 31.

Rosenberg has decided that the best course of action is to wait for the results of that report, before crafting new legislative language for introduction in 2018.